Alan Kohler may have won a victory in his long campaign against Alinta’s massive fee gouge with the AFR reporting the super-aggressive WA utility is about to buy back its under-performing Alinta Infrastructure Holdings offshoot.
The Fin’s James Hall says an announcement might be made as soon as today with Alinta offering the same $2 it floated AIH at last year – a price not seen by investors who have become increasing annoyed by the gouge. Kohler has had many cracks at the Alinta’s fees, for example these pars penned during the AGL takeover fight:
Most infrastructure funds pay their external managers a 1.5% base fee plus 20% of any outperformance above an index benchmark, which is rich enough (This is commonly known as the Macquarie model).
Alinta and Origin charge their infrastructure funds those fees, plus a whopping 3% of gross revenue.
Alinta Infrastructure Holdings’ revenue last year was $62.9 million, of which 3% is $1.9 million. Alinta’s plan, once it gets control of AGL, is to continue with AGL’s existing demerger plan (into energy and infrastructure businesses) but then to enfold the latter into the Alinta model. According to AGL’s demerger scheme documents, AGL Infrastructure’s revenue last year would have been $4.9 billion, of which 3% is $147.4 million. Now that’s more like it – serious money.
It seems to all became too serious for the punters. Encouragingly, Alinta’s model might well have been the high water mark for managers ripping off investors for not doing much. And like all tides, once they turn, they tend to run out quite a ways.
The Millionaire Factory has already been watching which way the tide flows. Macquarie Infrastructure hiving off its Sydney toll roads was partly about listening to investors’ complaints about rich fees for managing mature assets. It might also have been something at the back of Alan Moss’s mind yesterday when he was warning that MacBank’s amazing profit growth couldn’t last forever.